2 minute read
Government Relations
Albany Update
Denise Murphy McGraw Hill, Gosdeck & McGrawE LLC
On January 21, Governor Andrew M. Cuomo proposed slowing the growth of state spending to deal with a $6.1 billion state budget gap, reducing aid to localities, trimming the state workforce and authorizing a range of other initiatives, including legalizing and taxing recreational marijuana.
Cuomo, a Democrat in his 10th year in office, proposed an overall budget of $178 billion for New York’s 2020-’21 fiscal year, which begins April 1. That would amount to a more than a $2 billion increase over this year’s budget.
But Cuomo said his proposed budget is actually $6-billion less than the state will spend if he and lawmakers do nothing to slow spending growth rates he and lawmakers approved in the last budget.
Cuomo also proposed boosting aid to local school districts by $826 million, or 3 percent. About 80 percent of that increase would go to high-needs districts under Cuomo’s plan.
The overall budget gap isn’t due to declining tax receipts; New York actually is on course to see them grow by nearly 7 percent. Instead, the deficit is due largely to growth in enrollment and spending on Medicaid, the health-care program for the poor and disabled, as well as steady spending increases in other areas. To tackle it, Cuomo said he’s banking on tax receipts increasing by $2 billion. He’s said he’s aiming to reduce aid to local governments by $1.8 billion, through a variety of savings and “efficiency” initiatives. He proposed abolishing a state agency, the office of Real Property Tax Services, and cracking down on the trafficking of illegal cigarettes. He wants to trim the state workforce by 1,000 (less than 1 percent). As expected, Cuomo also proposed legalizing recreational marijuana. It’s a plan Cuomo and the Democrat-controlled legislature
largely agreed to last year, but it fell apart amid disputes over how to earmark the tax proceeds. Officials say legal marijuana sales could generate $300 million for the state in the first year. Independent analysts have blamed overspending through measures to expand Medicaid and raise the minimum wage, including for health care workers, to $15 an hour.
Experts also have warned against using fiscal gimmicks to address the deficit at a time when tax revenues are robust. Last year, Cuomo shifted $2 billion in Medicaid costs into future years. School districts ha ve been bracing for the governor’s proposal. Under a state tax-cap law, school districts this year can raise their local tax levies by only 1.8 percent. To exceed the cap, most districts would need the approval of 60 percent of district voters in school budget votes in May.
Cuomo also proposed the following. • Reducing the corporate tax rate for small businesses to 4 percent from 6.5 percent, and tripling the income cutoff for the tax so more farmers and sole proprietors may benefit • Investment tax credits for farmers • I nvesting $300 million along the Erie Canal for job creation and flood control • Repealing a penalty that protects “S” corporations. Those are small businesses such as farms, family stores and law firms that don’t pay federal income taxes, but instead choose to pass corporate income and credits directly to shareholders for tax purposes.
The budget is due to be passed by the April 1 start of the 2020-’21 Fiscal Year.
For more information about this or any other proposal before the state government, contact Denise Murphy McGraw at dmurphymcgraw@hgmlobby.com
